Chen has declared that profitability within the crucial smartphone hardware business is the top priority for this year. With a poor first quarter he is sounding the call to duty for the company’s new mobility solutions division where he expects to break even or better later this year. Their hedging all bets on enhancing sales with new distri- bution channels along with a software licensing service. The besieged CEO told analysts on the company’s market call “I really, really believe that we couldmakemoney out of it... out of our device business.” Some seriously question that mindset. This last quarter, the second quarter the Priv has been sold, Blackberry collected $152 million US of revenue and ended with a $21 million US net loss. The trend is downward for devices sales. Blackberry managed nearly 500,000 devices sold at just under $300 per unit. Those sales figures are off by 100,000 devices from the previous quarter and twice that amount from two quarters ago. The company’s own finan- cial reports to the market stated that with a $300 per device price Blackberry needs to sell about 3 million units to break even.
and see approach with Blackberry stock for some time. The company had positive news with operating profits in its other two business units: $37 million US from software and services, and $78 million US from service access fees. Analysts estimate a 33-cent per share loss this fiscal year but Blackberry says that number will be more like 15 cents.
“I really, really believe that we could make money out of it... out of our device business.”
Blackberry took some heavy hits recently totaling a per share loss of $1.28 US. That included a half billion dollar US write down of smartphone assets. If you exclude all the extraordinary accounting items like write downs and restructuring, Blackberry was only $1 million US away from breaking even which surpasses analyst’s expectations.
The trend is downward for devices sales
Chen said the Priv has sold poorly because it is just too expensive for all but top level executives. To counteract this weakness Blackberry plans to introduce two mid-range Android phones before the end of the fiscal year. Chen said he would provide the spe- cifics on these devices next month.
The hard working CEO has suggest- ed in the past that the company will abandon device manufac- turing and sales if the division
cannot operate at a profit. Chen believes devices will turn a profit but he isn’t putting all his eggs in one basket. BlackBerry will start to license some of
its device software to improve growth and profitability. Chen said the software licensing plan could help make a depar- ture from devices smoother if the time comes.
Analysts have had a wait
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JULY 2016 • SPOTLIGHT ON BUSINESS
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